The Border is an Imaginary Line

Tech Toronto is a monthly tech industry meetup that has gathered a great response with 350-450 people attending recent events. I believe the response is largely due to its unique lineup. Rather than the usual meetup where one speaker talks on one topic for an hour, they have 5 leaders in the Canadian Tech industry do a 5 minute TedTalk-like talk about something they have learned in their journey.

At July’s meeting, Dan Debow from Salesforce labeled his discussion as “the border is an imaginary line”. Dan was one of the co-founders of Rypple, a cloud-based social performance tool that was bought by Salesforce in 2012. A Canadian Tech success story with a successful exit.

The essence of the lesson learned is that geographical boarders are made by man and business can and does regularly work across them. Though for a variety of self-limiting reasons, Canadian tech companies often believe they have to make it locally first before they venture abroad. Yet with larger more lucrative markets outside of the country, it’s actually sometimes easier to achieve success outside of the country first. A strange but true Canadianism.

If you look at some of the Canadian technology success stories one of the things that they all have in common is that they have looked beyond the border and established business globally. To name a few… Rypple, Eloqua, OpenText, HootSuite, and should I say it… even Nortel and Blackberry in their day.

The idea somewhat resonated with me having more often worked with customers globally than locally and having lived abroad in Ireland for 10 years. My quick response to how I ended up in Dublin is that I went from Vancouver to Ireland on a reference from Asia. I was offered a job in Ireland because I had previously worked at one of the company’s competitors and one of my connections in Asia who had also made that corporate leap provided a glowing recommendation of me. So I’ve been chewing on the comments raised by Dan, filed it away as a post idea, pulling it out today.

I think that Canadian tech founders by and large are a bit nervous about doing business outside the country. There is this thought that you first need to focus small here, and then extend out to further markets. That going “out there” may increase your costs. That it can involve complications with currency, tax and shipping. That there will be Timezone considerations and it can be hard to provide a local cultural touch. There is basis in all of this, but they are business risks that can be managed. As well, except for currency, the same concerns apply if you are trying to do business across Canada as well.

So let’s consider some of the more positive reasons I think that need to consider, if not a Global rollout plan, at least a North American rollout plan. After all, the US market is 10x the size of Canada.

Market Size and Market Niches

To repeat, the US population is 10x the size of Canada. There is probably more people that are willing to buy your products and services there, then here at home in Canada. Unless, you are doing something that is tied to regulations in Canada – like you are a Canadian tax account – then exposing your company to the larger market increases the probability that you will find more customers.

Even though people are concerned that they have to make it locally before going abroad, I would say that almost the opposite can be true. Become a success in the States, and your Canadian customers will follow you. Looking to the larger market may give you the traction that will then make you more attractive to local companies.

I also strongly believe that niches go around the world. I think that’s the underlying reason I ended up working for a small software company in Dublin was that I had the niche skills that they were looking for. And while working with their top customers in EMEA, I also shared a global network with my counterparts in other regions. So my inner network was and still is largely a global one.

If you are offering a niche product or service where there are only a small handful of people here in Canada that will buy from you, isn’t it better to also try to reach that handful of people who will buy from you in each of New York, Boston, Chicago and San Francisco.

The US$

The hilarious thing is that as a Canadian customer of a Canadian company – Hootsuite – I still pay my bill in US$. Canadians are used to doing that. So even if your offering is for all of North America, you can still set your prices in US dollars.

I believe there is more stability in pricing in US$ anyway.

Though we spent a large part of recent years almost on par, most of the last 40 we have been lower. As well our dollar is more vulnerable to changing global conditions and changes in commodity prices (like oil!).

Trade in Canada has always gone North-South before East-West.

Canadians in Toronto and Montreal, often find it easier to do business along the Eastern seaboard. Vancouver companies have a stronger affinity with customers in California and the Pacific North West. That’s because it is easier to actually reach out and do business just beyond where you are, then across the country. We are a bigger country than most of us realize. As well, to repeat as above, the local markets south of us are sometimes bigger than the ones across. So if you are stretching beyond the local, there is a stronger pull to stretch south.

There are plenty of ways that you can service customers without having to go there

With the advance of SaaS services, customers can truly be anywhere. Your product can be accessed remotely. If you have concerns about accessibility and bandwidth, then you can also initially use cloud platforms (Amazon, IBM, Saleforce) that can help you scale to meet international needs.

Along with your product being something that people can access from anywhere, you can also service customers remotely. Service in the tech industry is also becoming more and more self-service, with automated help processes, community forums, and remote chat. There are lots of tools available that help with this.

It doesn’t have to cost an arm and a leg to have a local presence

I believe it’s important if you are selling into a region to have a presence in that reason. However, small.

Having worked for smaller software companies, I can tell you that I’ve seen more than one “international” office address as actually being a shared office space with 1 or 2 sales people in it. A local presence doesn’t have to be an expensive proposition.

If there is work that has to be done on the ground, it can also be done through partners or contractors, who are supported by your experts remotely. Saving expensive trips for key technical staff for larger deals or regularly scheduled checkins.

Finally,

So how about it? If you are starting up your own technology company, do you have a plan to market to customers outside of Canada? Do you agree with the points I’ve presented. Please leave a comment to add to the conversation.

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